Draw a graph to show the market effects of the minimum price

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Excess Supply from a Minimum Milk Price. In the equilibrium in the powdered milk market, the quantity is 100 million units and the price is $9.00 per unit. The price elasticity of demand is 0.80 and the price elasticity of supply is 2.50. Suppose the government imposes a minimum price of $9.90.

a. Draw a graph to show the market effects of the minimum price.

b. At the minimum price, the quantity of powdered milk supplied is____ million units, the quantity demanded is_________ million units, and the excess supply is _______million units.

Reference no: EM131130258

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